Newport's library board walked into a packed room Tuesday night and tried to calm a community still buzzing over a state report that found its chairman steered about $77,000 in flood-relief donations into an outside foundation account and spent thousands from it without full board approval.
The findings, laid out in a report released last month, drew residents to the meeting in force, many of them demanding clearer financial controls and a cleaner paper trail. Board members insisted the money helped finish renovations at Stokely Memorial Library after Hurricane Helene, but neighbors in the room were not shy about asking who signed what and why.
What the state found
According to a report by the Tennessee Comptroller of the Treasury, investigators reviewed records from Oct. 1, 2023, through Sept. 30, 2025, and found that 20 donations totaling $77,207.29 were deposited into a Kiwanis Club of Newport Foundation bank account instead of with the county trustee.
The report says the board chairman issued 20 checks and one electronic payment from that account, together totaling $25,091.08. After $18.82 in interest, the account held $52,135.03 available for Stokely's use as of Sept. 30, 2025.
Investigators wrote that the chairman "maintained exclusive control over receipting, depositing, and expending funds," a setup they said significantly increased the risk of fraud or misuse, even if the spending was intended for library needs.
Board meeting and the chair's explanation
At Tuesday night's board meeting, Chairman Steve Davidson acknowledged the findings and told residents the Kiwanis Club of Newport Foundation is a registered 501(c)(3). He said routing donations through that account and issuing payments from it was intended to speed up flood repairs, according to WBIR.
Board members added that they have either corrected or are in the process of correcting each deficiency listed in the comptroller's report and asked residents for patience while contractors finish the remaining work. Representatives from the comptroller's office told the station they did not identify criminal violations in the records they reviewed, WBIR reported.
Flood repairs and the library
The Stokely Memorial Library was badly damaged by flooding after Hurricane Helene and managed a soft reopening in December 2025. Renovations were paid for with a mix of state grants and private donations, according to local coverage.
WVLT reported on the repairs and the community fundraising campaign that helped bring the building back into service. Several patrons at Tuesday's meeting said they fully support the library's comeback but want much clearer rules about where to send donation checks and who is allowed to sign off on them.
Internal control gaps and recommendations
The comptroller's report lists several internal-control and compliance problems. Among them: the board did not have a fiscal sponsorship agreement with the Kiwanis Foundation, operated with fewer than the required number of board members, failed to complete trustee certification training, and did not prepare a written, itemized annual budget.
Investigators recommended that the board ensure all donations are deposited with the county trustee, adopt written agreements whenever a fiscal sponsor is involved, and return any remaining foundation funds to the library board so they can be spent only through authorized channels.
The report says copies were forwarded to Governor Bill Lee, the State Attorney General, and the District Attorney General of the 4th Judicial District for review.
What comes next
Board members told residents they plan to roll out new procedures, give the public clearer financial reporting, and work with county officials to close the gaps that WBIR highlighted.
The comptroller's recommendations effectively hand the board a short checklist of fixes. Whether prosecutors decide to look any deeper will depend on how their offices evaluate the record now in front of them.
In the meantime, Newport donors and regular library users are making one request loud and clear: keep the books open, keep the receipts straight, and keep the focus on rebuilding the library, not explaining its bank accounts.
